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Aviation and aerospace industry
Economic environment of business chapter 3
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Introduction
The Boeing Commercial Aircraft Company which was founded in 1916 by is the largest aero-space company and the manufacturer of commercial and military aircraft in the world. When it comes to sales, Boeing is the number one U.S. exporter. Boeing’s military aircraft comes with satellite, missiles launch vehicles and advanced information and communication systems.Boeings main competitor was Mc Donnell Douglas but in 1996 the aerospace giants announced about their merge.
Question 1
It is clearly understood that any industry that plays a role in the macro economy will experience the shift and variability of the economic environment. As a crucial and essential section of the economies of the world’s nations, the air transport industry is dependent upon the changes of the external macro environment and, therefore, predicts a variety of positions over time in reaction to changes in the economic environment.
The commercial aviation industry is a multi-dimensional system that involves and is affected by, several stakeholders and sectors such as governments, passengers, airlines, aircraft leasing companies airports, aircraft manufacturers, airlines, governments, aerospace supply manufacturing and suppliers. (Mack 2013)
The economy of the country is a massive factor for aircraft manufacturers. When the economy is suffering from a recession the need for airline travel decreases. The request and purchase of new airplanes also declines when the economy drops. Boeing needed to seek to other countries for business and to concentrate on extra military projects.
For environmental and economic reasons, airline customers need ever-increasing fuel efficiency. Boeing and the aviation industry are dedicated to reducing the carbon dioxide...
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... of safety in their commercial airliners, but it actually depends on the airline carrier to maintain and service the aircraft regularly and keep up the good high quality standards to avoid the fatalities like the midair disintegration of the China airline in 2002 exactly 22 years after performing the faulty repair that wasn't performed in compliance with the Boeing Structural Repair Manual (SRM).
Question 3:
“Customer is KING” Boeing gives excellent customer service by fulfilling their demands, for instance southwest airlines who use 737 for their entire fleet wanted to have a new 737 model with fuel efficiency but 737s re-engining might land Boeing in financial crisis. But southwest threatened to convert to airbus, due to airline pressure Boeing obliged for their demands and started a new 737 max project.(Brooks.A.,Weatherson, J. and Wilkinson, G. 2011)
As the nature of air travel is largely logistical, it is hard to talk about the industry without addressing geography. Airlines don't just have to market to customers in terms of geographics, the airline industry is geographic; getting a customer from where they are to where they want to be.
The Boeing Company originally started out as the Pacific Aero Products Co., which was founded on July 15, 1916. The name was changed about a year later to The Boeing Airplane Company. The Boeing Company stayed relatively small until World War I when they were selected by Navy officials to produce an order for 50 model C's planes for the war efforts. The company continued to prosper and by the late 1950s, Boeing President William Allen knew that the company had the scientists, the experience and the facilities to lead the company into uncharted territories. He was right, Boeing has emerged as the leading aerospace company in the world today.
As airline industry is a competitive marketplace, the airline companies use new technologies to improve their efficiency and decrease the overhead costs, including ‘advanced aircraft engine technology, IT solutions, and mobile technology’ (Cederholm 2014). The technology changes including technology improvement, new innovation and disruptive technology. The disruptive technology need to meet the characteristics of ‘simplicity, convenience, accessibility and affordability’ (Christensen 1995). The technology changes would bring both opportunities and threats to airline companies. Since Labour cost and fuel costs occupy 50% of most airlines operating cost (Groot 2014). Therefore, if new technologies could be disruptive in the two aspects, there will be important changes to current airline
The Boeing Corporation is one of the largest manufacturers in the world. Rivaled only by European giant Airbus in the aerospace industry, Boeing is a leader in research, design and manufacture of commercial jet airliners, for commercial, industrial and military customers. Despite enjoying immense success in its market and dominating an industry that solely recognizes engineering excellence, it is crucial for Boeing to ensure continued growth through consistent strategy formulation and execution to avoid falling behind in market share to close and coming rivals.
United Airlines is one of the largest airlines in the United States and worldwide. Also, it is ranked as the oldest commercial airline that was founded by Walter Varney. United Airlines started as an Air Mail Service and then extended its services to be an Air Carrier. In 1927, William Boeing started his own airline, Boeing Air Transport, and started buying any other air mail companies, which included the Varney’s Air Mail Company. After a while, Boeing started manufacturing aircraft and parts, which allowed him to extend his company to a bigger organization. Also, within Boeing’s company, he bought several airports to expand his organization. In 1929, Boeing’s company has changed its name to be United Aircraft and Transport Corp. (UATC).
Boeing has looked at everything from the design of the anti-collision lights, to the reduction of small gaps in the airfoil. This has created an aircraft that is extremely aerodynamic and efficient at any task it performs. The 737 was originally created on May 11, 1964, however it wasn’t until November 9, 1964 that production was officially approved. On February 19th 1965 Lufthansa placed its first order for the 737-100, and on the 9th of April 1967 the 737 flew for the first time. In 1970, Boeing had less than 35 orders for the 737 and considered canceling the program.
Boeing/Airbus Case Analysis Competition in the Commercial Aircraft Business. With only a few large companies across the globe (Boeing, MD, and Airbus), the commercial aircraft industry essentially exhibits the qualities of an oligopolistic competition with intense rivalry. Here is an analysis of competition in the commercial aircraft business using Porter’s Five Forces. Figure 1: Porter’s Five Forces Applied to Aircraft Industry. Barrier to entry: - High barriers to entry, to a certain extent, help understand the risks involved in operating in the aircraft industry.
As unemployment has remained relatively steady from 2003 to 2007, the Gross Domestic Product for the United States has increased. The Air Transportation Industry contributes an average of 0.4 percent to the GDP. However, has GDP has increased, the Air
Over the last 50 years The Boeing Company has shown itself to be an industry leader in the fields of technology and putting their vast physical assets to use. Boeing has been on the forefront in innovation in both commercial aviation, and airplanes used for defense purposes. Whether it was the introduction of the first modern airplane with dual engines when the Boeing 247 was unveiled or introducing new standards of efficiency into their business model Boeing seems to have always been one step above the competitors. So while Boeing was hurting their competitors on one end they decided to go and become more efficient on the other end. So not only were they the leader in technological innovation they improved the productivity of their largest business unit all while decreasing the amount of space they used. When a company is hitting on all cylinders like Boeing seems to be it becomes hard to compete, and their competitors are likely finding that out first hand.
Boeing was founded in 1916 in Seattle, Washington by William E. Boeing. The company is regarded as one of the world’s leading manufacturer of commercial and military aircrafts; it controls more than half of the passenger aircrafts’ market in addition to military jets and helicopters. The company also has other contributions in space technology and projectile systems (Amir, 2013). This report will analyze Boeing Company’s latest marketing strategy that the company has been dealing with for the past five years whilst the production of its much anticipated 787 aircraft. Throughout the report the aircraft will be referred to as the 787, the ’87, or the ‘Dreamliner’. Mainly, this failed strategy affected the company's negatively in terms of both sales and reputation.
Several large scale, interrelated conditions have affected the airline industry over the past several years in such a manner that every carrier has had to respond in order to remain viable and competitive.
Airline industry is affected by no. of factors such as fuel price fluctuations, high fixed costs, strong influence of external environment and excessive use of marginal costing by carriers. Recessions in the industry tend to last longer, while recovery periods are generally shorter. Over the past nine years, it is observed that industry has made losses for five years and during the profitable years margins were on a lower end. The airlines industry is acutely sensitive to external events such as wars, economic instability, government policies and environmental regulations.
Air travel is a huge and tremendously flourishing industry. Globalization can be defined as the integration of national and local economics, culture and societies through a web of communication, transportation and trade. The current era considers globalization as the dominant driver of almost all business due to the influence or the international market. The emerging prosperity of the global aviation industry plays a substantial role in economic growth, tourism, global investment and world trade, which are the impacts of globalization. This essay portrays the negative and positive effects of this globalization on the airline industry.
In 1990 Boeing was set to introduce the 777, the world’s largest and longest haul twin-bodied jet at the time. The 777 would serve the medium and long haul markets like the expanding Asian market. Boeing’s main competitors, Airbus Industries and McDonnell Douglas, had already announced plans to produce airliners that would compete directly with the 777. Analysts believed that the intense competition between the manufacturers would serve to depress prices for the airliners. Lower prices for aircraft would mean lower earnings.
The airline industry is very susceptible to changes in the political environment as it has a great bearing on the travel habits of its customers. An unstable political environment causes uncertainty in the minds of the air travellers, regarding travelling to a particular country.